2018 (6) TMI 307 - AT - Central Excise

Appeal allowed as refund claim not time-barred; duty not passed on to customers.

M/s. Swadeshi Polytex Ltd. Versus Commissioner of Central Excise & Service Tax, Ghaziabad

The Tribunal allowed the appeal, finding the refund claim not time-barred as duty was paid under protest. The appellant successfully demonstrated that the ... Refund of duty paid under protest - rejection on the ground of time limitation and unjust enrichment - Section 11B of Central Cxcise act, 1944 - Held that:- During the relevant time if the duty was paid under protest limitation was not applicable as per first proviso to sub-section 1 to section 11B of Central Excise Act, 1944 - the duty was borne by the appellant whereas there was no mention of duty in the invoices and this is how the duty was not recovered from the customers. Therefore since the duty was paid under protest and law provided that during the relevant time if duty was paid under protest, limitation did not apply therefore we hold that the present application for refund is not hit by limitation. Unjust enrichment - Held that:- there was no mention of duty in the invoices and this is how the duty was not recovered from the customers. - The appellant has proved that the duty burden was not passed on to the customers - principles of unjust enrichment do not apply. Appeal allowed - decided in favor of appellant. Issues Involved:1. Limitation Period for Refund Claim2. Burden of Duty Passed on to CustomersIssue-wise Detailed Analysis:1. Limitation Period for Refund Claim:The appellant paid duty under protest from 14.5.1986 to 30.6.1990 and filed a refund application on 7.4.1997, which was rejected by the Deputy Commissioner of Central Excise citing that the refund claim was barred by limitation as per Section 11B of the Central Excise Act, 1944. The original authority noted that the classification dispute was resolved in favor of the appellant by the Collector (Appeals) vide Order-in-Appeal No.188/91 dated 3.5.1991, which attained finality. Therefore, the six-month limitation period for filing the refund claim started from that date. The Commissioner (Appeals) upheld this view, stating that the cause of action for filing the refund claim arose from the said order, and the claim filed on 7.4.1997 was barred by limitation. However, the appellant argued that as per the proviso to Section 11B(1) of the Central Excise Act, 1944 (as it stood till 1990), the limitation of six months did not apply to duties paid under protest. The Tribunal agreed with the appellant, stating that since the duty was paid under protest, the limitation did not apply, and thus, the refund claim was not time-barred.2. Burden of Duty Passed on to Customers:The original authority and the Commissioner (Appeals) rejected the refund claim on the additional ground that the appellant failed to prove that the duty burden was not passed on to the customers, citing the Supreme Court judgment in COMMISSIONER OF C. EX., MUMBAI-II versus ALLIED PHOTOGRAPHICS INDIA LTD. The appellant contended that the duty was not charged in the invoices issued to customers, and the duty was borne by the appellant as evidenced by the AR-1 forms and assessment memoranda. The Tribunal found merit in the appellant's argument, noting that the invoices did not mention the duty, and thus, the duty burden was not passed on to the customers. The Tribunal relied on the Supreme Court ruling in Commissioner v. Alstom Ltd., which held that if the buyers did not pay the duty as entered in the invoices, the incidence of duty was not passed on to the buyer. Consequently, the Tribunal held that the appellant had reasonably established that the duty burden was not passed on to the customers.Conclusion:The Tribunal allowed the appeal, holding that the refund claim was not barred by limitation since the duty was paid under protest, and the appellant had proved that the duty burden was not passed on to the customers. The Tribunal directed the Revenue to pay the refund along with the applicable rate of interest within 90 days from the date of receipt of the order.